One question has been why the euro has stayed relatively strong through the EU debt crisis. The Euro has fallen since the highs of the year, but euro looks like ti will end the year close to where it started the year at 1.32. Versus the Swiss franc, there is also minimal change versus the strong euro decline in the summer.
The discussions of the dismantling of the euro should have had more far-reaching impact on the currency. Some of the support is technical as flows from banks move back to Europe, but a second reasons has been the strong supportive policies of the ECB, With interest rates higher in the EU and the ECB being less clear on their willingness to open up the printing presses. there has been greater monetary support of the euro.This as changed with the policies of President Draghi who has moved to cut rates and provide better financing to banks through lower collateral.
The discussions of the dismantling of the euro should have had more far-reaching impact on the currency. Some of the support is technical as flows from banks move back to Europe, but a second reasons has been the strong supportive policies of the ECB, With interest rates higher in the EU and the ECB being less clear on their willingness to open up the printing presses. there has been greater monetary support of the euro.This as changed with the policies of President Draghi who has moved to cut rates and provide better financing to banks through lower collateral.
Trichet moved rates higher in April and July from 1 to 1.5 percent. Draghi has reversed that increase and is expected to have further cuts in the first quarter. The differential between the US and European is closing and the rationale for holding euro high quality paper (if there is a such a thing) has declined.
Looks like the year of the dollar is more likely.
Looks like the year of the dollar is more likely.
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